In an unexpected twist, Vice President Kamala Harris has come out in favor of eliminating taxes on tips for hospitality and service workers, a move reminiscent of a proposal made by former President Donald Trump not long ago.
This announcement took place at a campaign rally in Las Vegas, where Harris, alongside Minnesota Governor Tim Walz, rallied thousands, including members of Nevada’s influential culinary workers union.
“When I become president, I promise that we’ll fight for working families, raise the minimum wage, and eliminate tips taxes for service and hospitality workers,” Harris declared to the enthusiastic crowd.
This endorsement marks a pivotal moment in Harris’s campaign, showcasing one of her first major economic proposals since taking a leading role on the Democratic ticket last month.
While chatting with reporters in Arizona, Harris hinted at unveiling her comprehensive economic policy platform next week, focusing on ways to cut costs and boost the economy.
Andrew Harnick and Tom Williams/ASSOCIATED PRESS
This concept of tax-free tips was initially brought forward by Trump during his own rally in Las Vegas back in June. He aimed to connect with the state’s large hospitality workforce, promising, “You hotel workers who depend on tips will be thrilled because we won’t tax them anymore when I take office.”
Interestingly, support for this initiative spans party lines, with 68% of Republicans and 65% of Democrats backing the abolition of tip taxes.
However, the financial ramifications of this policy are far from straightforward. The Committee for a Responsible Federal Budget estimates that making all tipped income exempt from federal income and payroll taxes could lead to a reduction in federal revenues between $150 billion to $250 billion over a decade. The actual loss could escalate once potential behavior changes are factored in.
Concerns about the proposal’s effects have been raised by Howard Gleckman from the Urban-Brookings Tax Policy Center, who suggested it might only benefit a limited number of high-end restaurant waiters.
The political dynamics in Nevada — a crucial battleground state — further complicate the issue. In the 2020 election, Biden narrowly outpaced Trump by just 2.4 percentage points in this state. Now, both Harris and Trump are in a tug-of-war for the support of Nevada’s service industry workforce.
The day prior to Harris’s rally, the Culinary Workers Union Local 226, which represents 60,000 hotel, restaurant, and entertainment workers, voiced its endorsement for Harris. “Victory runs through Nevada,” said the union, “and we’ll help deliver it for President Kamala Harris and Vice President Tim Walz.”
Ironically, the union had expressed skepticism towards Trump’s initial tax proposal back in June. As the campaign heats up, both candidates are expected to visit Nevada frequently, recognizing its significance in the forthcoming election.